Friday, October 02, 2009

Bad advice by agents on Term Insurance

Some consumers approached an agent to buy Term insurance. The agent quoted a Term insurance premium that is more than twice what it available in the market. The agent pointed out that it is too much money to pay for the Term insurance, and sell a Whole Life, Critical Illness or Investment Linked policy instead.

This is misleading and bad advice. But it is used by the agent to get customers to buy a high cost product.

If you wish to buy Term insurance, you have to approach several insurance companies directly and get a quotation from them. Look for a Term insurance policy to cover 25 years or to cease at age 60. Do not go beyond this age, as the premium rate will be too high and the insurance is not necessary (after your children have grown up and you have sufficient savings).

Tan Kin Lian
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3 comments:

Anonymous said...

Remember the cost of insurance (COI) is the SAME for everyone and pegged to age no matter when you take up.EG. a baby's cost of insurance when he or she is at age 40 is the same as the person who just bought it at age 40. The premium has 2 components, COI + surplus premium(SP). COI increases with age and SP grows depending on investment return and from the cash value.

October 02, 2009 9:29 AM
Anonymous said...

Insurance agents always discourage term and will say the bad things about term. The reason is obvious. They want to sell wholelife only to earn higher commission.
Their usual argument is term has no cash value and it does not cover for whoelife.This is a scare tactic. The argument is half truth.

October 02, 2009 12:29 PM
Vincent Sear said...

There're differences in term insurance policies too. There's annual renewable, 5-year renewable and long-term level term. Have to choose appropriately according to circumstances.

October 02, 2009 12:40 PM

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